Escaping dependencies: Europe moves to find balance in the global energy picture
Yesterday the European Commission unveiled the awaited Net-Zero Industry Act, introducing a new regulatory framework to boost domestic industries’ competitiveness and scale up the EU’s industrial capacity. Paired with the Critical Raw Materials Act, the plan also aims to to tackle one of Europe’s major challenges to the energy transition: the access to critical raw materials.
The majority of raw materials use in clean technologies comes from outside the EU. China provides 98% of the EU’s supply of rare earth elements, while Turkey supplies 98% of EU borate imports. As much as 71% of platinum, 92% of iridium, 80% of rhodium and 93% of ruthenium supplies currently come from South Africa.
With the rising demand for raw-material-intensive low-carbon technologies, Europe’s lack of natural sources is becoming an issue. Just for electric vehicle batteries and energy storage, the EU will need up to 18 times more lithium and five times more cobalt by 2030 compared to the current supply. A reliable and unhindered access to critical raw materials is a must.
Since 2020, the price rise of minerals and metals have caused an increase in clean energy technology costs. The COVID-19 lockdowns and Russia’s invasion of Ukraine have triggered several supply chain bottlenecks, further contributing to this rise. While the EU has taken steps to end its dependence on Russia’s oil and gas imports, we must be careful not to fall into other risky dependencies on a single country or region that might put at stake the very future of our transition to net-zero.
Europe must diversify its sources and accelerate its energy transition. To do so, measures could focus on three key aspects: sustainable domestic mining and processing of raw materials, clean and renewable energy technologies deployment and recycling.
Suppliers’ diversification and due diligence
As the EU cannot source all the needed materials domestically, it will need to diversify its partnerships to avoid overdependence on a single country or region. A recent study by MIT shows that global geological reserves should be enough to meet the needs of the energy transition and that the extraction and processing of commodities can be done with a marginal environmental impact.
The challenge therefore will be to make sure that the extraction of raw materials is met with the highest environmental, social, and human rights standards.
Conventional mining has a controversial reputation, in part for its impact on the environment and local communities, but also for its reliance on highly emitting fossil fuelled machinery to carry out its processes. But, companies are now exploring ways to clean up extraction processes, with several opting for battery-operated electric mining equipment powered by renewable energy instead of fossil fuels.
For a sustainable and secure energy transition, Europe also needs to scale up its production of solar panels and windmills, among other technologies.
Except for famous cases like Italy’s 3Sun Gigafactory, Europe’s largest high-performance bifacial photovoltaic modules factory, there are very few large-scale production sites that could contribute to meeting the demand sparked by the green transition.
Recycling of critical technologies
Together with the production of renewable technologies, it is crucial to already start developing an efficient recycling system that will run smoothly once the market will be more populated by solar panels, electric vehicles, etc.
Investing now in the recycling phase would help building up a domestic supply of critical raw materials and reducing the need from mining activities. Moreover, it is estimated that the traction battery recycling sector alone will create about 10 500 jobs by 2035 in the EU.
These three areas are key to running the energy transition in the most sustainable way while avoiding new dependencies. Diversifying the supply from third countries and developing the EU's own capacity for extraction, production, and recycling is how Europe can become more resilient and sustainable.